Availing of car loans in Indianapolis to buy a used car can be trickier than if you were buying a new one. Apart from being charged a higher annual percentage rate, most lenders will not approve a loan for cars that are more than four years old. Here are three important considerations to keep in mind when looking for a used-car loan.
The valuation from the lender
In order to ensure that you will be able to borrow enough money to cover the cost of the used car, it is important that you get a high valuation. Lenders generally don’t accept the valuation of the seller as a basis for assessing how much to loan you, and thus, the two parties generally come up with different figures.
This is why it is important to do your homework first. You can look up price listings for the car from the National Auto Dealers Association and Kelly’s Blue Book. This will tell you if the lender is giving you a fair estimate on the loan.
The term of the loan
Since used cars devaluate quickly, the term of the loan should be no more than 48 months (four years) or less, if possible. When you finally pay off the loan, you will at least not have paid too much for the car compared with the value remaining on it, Blossom Chevrolet explains.
A non-recourse loan
In case you default on your car loan, lenders protect themselves against losses by using a recourse loan, which requires you to pay the difference if the value of the car is less than the amount you still have to pay off on the loan. Thus, it is important that you look for a non-recourse loan from the lender to protect yourself.
Finally, remember that it is easier to get used car loans in Indianapolis if you buy from a dealer since lenders see this as having a lower risk.